It’s time for accountability and transparency in unions
17 December 2012
Ian Lee, Ph. D
The House of Commons recently passed Bill C-377 to considerable controversy concerning mandatory financial disclosure by unions. Yet, this bill should be understood as nothing less than a “union sunshine law.”
By way of explanation, in modern society, many employees occupy a position as a trustee or fiduciary of someone else’s assets or monies.
For example, banking employees are classic examples of trustees or fiduciaries accountable to a higher standard than non-trustees, because the assets and monies e.g. bank deposits are not owned by the employee but belong to depositors. To that end, bank employees are subject to spot surprise internal branch audits and subject to bank Head Office Internal Audit and further federal inspections.
A person who acts as trustee of the estate of a deceased person or the affairs of an incapacitated person is accountable to a higher standard under the law. Estate trustees are required to comprehensively account for every disbursement of the trustee including the compensation of the trustee.
Likewise, publicly traded corporations are managing other peoples’ monies and investments. Canadian and American securities law compels the most remarkable, intimate and extensive disclosure of information — including executive salaries — concerning publicly traded companies, as they are dealing with the public’s funds. That is why publicly traded firms are subject to a much higher standard of disclosure than privately owned firms.
In the same vein, NGOs, charitable institutions, universities, colleges, school boards and hospitals are subject to higher disclosure requirements because the employees do not own the college or university or school or hospital.
In short, these employees — including hospital administrators, professors, teachers, education administrators — are trustees and fiduciaries.
Public service is the most obvious example of a trustee or fiduciary. The federal disclosure requirements have become increasingly stringent with oversight provided by the Comptroller General, Treasury Board Secretariat, Privy Council Office, Auditor General, Parliamentary Budget Office, and endless House of Commons and Senate Committees providing ever greater scrutiny in concert with greater disclosure.
In the 1990s Ontario passed the “sunshine law” that compelled the disclosure of salaries over $100,000 annually across the entire government of Ontario. However, it also included the MUSH sector of municipalities, universities, schools and hospitals, notwithstanding that these employees are not on the payroll or books of the government of Ontario, as they are separate employers.
Yet, today a unionized employee cannot easily access the financial statements of the union that represents the employee — although the Rand formula of automatic dues payment authorizes unions to collect union dues — and then spend the employee’s dues.
The secrecy practised by unions — supported by some misguided MPs — smacks of discredited old-time politics that is not reflective of a more open transparent modern liberal society.
The unions strongly protested this bill as some unions are spending monies on issues that they understand deeply — as surely as it snows in Ottawa in January — their members will oppose if it became known.
The unions want secrecy — not transparency — to be able to continue sponsoring activities in the dark without any scrutiny or accountability.
Why can an employee not determine how his or her union dues are being spent? Union paternalism and the secrecy of unions towards their own dues paying members is unconscionable and unethical.
Union officials, leaders and union executives are no different from bankers or pension trustees or MPs or public servants. They do not own the union. They are trustees and fiduciaries of the employees’ dues.
MP Russ Hiebert and MP Pierre Poilievre have been relying on a secondary argument in supporting the proposed union sunshine bill, arguing that because unions are tax exempt, they have public policy responsibilities.
However, a much more compelling logic requiring disclosure rests on the privileged position granted by Parliament or legislatures to unions, for individual rights to litigate against the employer are extinguished under collective bargaining laws with the authority to represent granted exclusively to the union — once it is recognized by the labour board.
At that point, every employee is required by law to work through the union on any issue with management. The choice to represent oneself has been removed completely.
In response, labour relations experts state that a majority of unionized employees can remove the union executive if members are disgruntled or unhappy with leadership decisions.
Yet how precisely can an employee determine what the union executive or leadership are doing, when the employee cannot obtain the financial statements and instead are provided self-serving information by the union leadership?
Where are the checks and balances that produce and guarantee accountability?
Unions are granted a privileged position by the legislature or Parliament and there should and must be balancing, compensating accountability achieved by comprehensive mandatory disclosure similar to Ontario’s sunshine law.
This column was first published in the Ottawa Citizen